-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VF4pISWbcxBA4quNJx+QT6hT/GAeOegPXjoYaHmzRGIBCVOQA7QhPeduhahv7Nbs sI1TXHv0dAzXGOJuQ0oBSA== 0000932384-96-000195.txt : 19961008 0000932384-96-000195.hdr.sgml : 19961008 ACCESSION NUMBER: 0000932384-96-000195 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960722 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961007 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DYNAMIC MATERIALS CORP CENTRAL INDEX KEY: 0000034067 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS PRIMARY METAL PRODUCTS [3390] IRS NUMBER: 840608431 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-08328 FILM NUMBER: 96640070 BUSINESS ADDRESS: STREET 1: 551 ASPEN RIDGE DR CITY: LAFAYETTE STATE: CO ZIP: 80026 BUSINESS PHONE: 3036655700 MAIL ADDRESS: STREET 1: 551 ASPEN RIDGE DR CITY: LAFAYETTE STATE: CO ZIP: 80026 FORMER COMPANY: FORMER CONFORMED NAME: EXPLOSIVE FABRICATORS INC DATE OF NAME CHANGE: 19920703 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A-1 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): July 22, 1996 ------------------- DYNAMIC MATERIALS CORPORATION - ---------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Colorado 0-8328 84-00608431 - ---------------------------------------------------------------------- (State or Other Jurisdiction (Commission (IRS Employee of Incorporation) File Number) Identification No.) 551 Aspen Ridge Drive, Lafayette, Colorado 80026 - ---------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (303) 665-5700 ----------------- Not Applicable - ---------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. Dynamic Materials Corporation (the "Company") filed a Form 8-K on August 6, 1996 reporting the acquisition of the Detaclad operation of E. I. duPont de Nemours and Company ("Detaclad"). The financial statements required in connection with that Report were omitted pursuant to the provisions of Item 7 of Form 8-K, and are being provided herewith. (a) Financial statements of business acquired. ----------------------------------------- Detaclad Business of E.I. duPont De Nemours and Company as of December 31, 1995 Report of Independent Public Accountants Statements of Assets to be Acquired at December 31, 1995 and June 30, 1996 (unaudited) Statements of Revenues and Direct Operating Expenses For the Year Ended December 31, 1995 and 1994 and the Six Months Ended June 30, 1996 (unaudited) Notes to Financial Statements (b) Pro forma financial information. ------------------------------- Unaudited Pro Forma Condensed Financial Statements of Dynamic Materials Corporation Unaudited Pro Forma Condensed Balance Sheet as of June 30, 1996 Unaudited Pro Forma Condensed Statement of Operations for the Six Months Ended June 30, 1996 Unaudited Pro Forma Condensed Statement of Operations for the Year Ended December 31, 1995 Notes to Unaudited Pro Forma Condensed Financial Statements (c) Exhibits. -------- None 2 DETACLAD BUSINESS OF E.I. DUPONT DE NEMOURS AND COMPANY FINANCIAL STATEMENTS AS OF DECEMBER 31, 1995 TOGETHER WITH AUDITORS' REPORT 3 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Management of Detaclad: We have audited the accompanying statement of assets to be acquired of the Detaclad Business of E.I. duPont de Nemours and Company (the "Business") as of December 31, 1995, and the related statements of revenues and direct operating expenses for the years ended December 31, 1995 and 1994. These financial statements are the responsibility of the Business's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 1, the accompanying financial statements were prepared to present the assets to be acquired and the revenues and direct operating expenses of the Business, which does not have a separate legal status or existence, and are not intended to be a complete presentation of the assets and liabilities or the results of operations of the Business. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets to be acquired of the Business as of December 31, 1995, and the revenues and direct operating expenses for the years ended December 31, 1995 and 1994, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Philadelphia, Pa., September 19, 1996 4 DETACLAD BUSINESS OF E.I. DUPONT DE NEMOURS AND COMPANY ------------------------------------------------------- STATEMENTS OF ASSETS TO BE ACQUIRED ----------------------------------- (in thousands) December 31, June 30, 1995 1996 ------------ ---------- (unaudited) ACCOUNTS RECEIVABLE $ 3,315 $ 2,143 INVENTORIES 2,221 2,109 PROPERTY AND EQUIPMENT, net 543 501 ------- ------- Total assets to be acquired $ 6,079 $ 4,753 ======= ======= The accompanying notes are an integral part of these financial statements. 5 DETACLAD BUSINESS OF E.I. DUPONT DE NEMOURS AND COMPANY ------------------------------------------------------- STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES ---------------------------------------------------- (in thousands) Year Ended Six Months December 31 Ended ------------------- June 30, 1995 1994 1996 -------- -------- ---------- (unaudited) NET REVENUES $ 11,218 $ 7,942 $ 5,925 COST OF GOODS SOLD 8,619 6,270 4,767 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,459 1,330 671 -------- -------- -------- Excess of revenues over direct operating expenses $ 1,140 $ 342 $ 487 ======== ======= ======== The accompanying notes are an integral part of these financial statements. 6 DETACLAD BUSINESS OF E.I. DUPONT DE NEMOURS AND COMPANY ------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- (Information as of and for the Six Months Ended ----------------------------------------------- June 30, 1996, is Unaudited) ---------------------------- 1. BASIS OF PRESENTATION: ---------------------- The accompanying financial statements present, on a historical cost basis, the statement of assets to be acquired and the statements of revenues and direct operating expenses of the Detaclad Business (the "Business") of E.I. duPont de Nemours and Company ("DuPont"). The Business was part of the specialty chemicals division of DuPont and does not have a separate legal status or existence. The Business's results of operations have historically been commingled with the specialty chemicals division. These statements are presented as if the Business had existed as a separate entity during the periods presented. The accompanying financial statements are not intended to be a complete presentation of the assets, liabilities or the results of operations of the Business on a stand-alone basis. The Business incurs certain common costs that relate to both the Business and other DuPont operations. The accompanying financial statements do not include any allocation of these common costs. In addition, income taxes have been excluded from the accompanying financial statements as the responsibility for such taxes is being retained by DuPont. 2. SUBSEQUENT EVENT: ----------------- On July 22, 1996, DuPont entered into an agreement with Dynamic Materials Corporation ("DMC") to sell certain assets of the Business to DMC for approximately $5.0 million. The purchase price is subject to an adjustment after closing on a dollar-for-dollar basis to the extent that the actual value of the inventory and accounts receivable at closing are not equal to the estimates used to determine the purchase price. 3. ORGANIZATION AND BUSINESS: -------------------------- The Business is engaged in the explosion bonded clad metal business. Primary end products made by these cladded metals include bi-metal and tri-metal materials used in the superstructure of naval ships, electronic packaging equipment and heat exchangers used in nuclear and non-nuclear power plants. 7 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: ------------------------------------------- Inventories - ----------- Inventories are stated at the lower of cost or market; cost is generally determined by the average cost method. Inventories consist of the following: December 31, June 30, 1995 1996 ------------ ------------ ---(000s)--- Raw Material $ 533 $ 717 Work in process 1,688 1,392 --------- -------- $ 2,221 $ 2,109 ========= ======== Interim Financial Statements - ---------------------------- The financial statements as of June 30, 1996, and for the six months ended June 30, 1996, are unaudited. In the opinion of management of the Business, the unaudited financial statements as of June 30, 1996, and for the six months ended June 30, 1996, include all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation. The results of operations for the six months ended June 30, 1996, are not necessarily indicative of the results to be expected for the full year. Property and Equipment - ---------------------- Property and equipment are recorded at cost. Additions, improvements and betterments are capitalized when incurred. Maintenance and repairs are charged to operations as the costs are incurred. Depreciation is computed using the straight-line method over the estimated useful life of the related assets as follows: Building and improvements 3-25 years Manufacturing equipment and tooling 3-15 years Furniture, fixtures and computer equipment 3-10 years Vehicles 3-5 years 8 Property and equipment consist of the following: December 31, June 30, 1995 1996 ------------ -------- ---(000s)--- Building and improvements $ 299 $ 299 Manufacturing equipment and tooling 1,124 1,171 Furniture, fixtures and computer equipment 49 49 Vehicles 588 588 Construction-in-progress 49 -- --------- -------- 2,109 2,107 Less- Accumulated depreciation (1,566) (1,606) --------- -------- Net property and equipment $ 543 $ 501 ========= ======== Revenue Recognition - ------------------- The Business's contracts with its customers generally require the delivery of several products per contract. The Business records revenue from its contracts upon shipment of completed products to the customer. If, as a contract proceeds toward completion, projected total cost on an individual contract indicates a potential loss, the Business provides currently for such loss. Use of Estimates - ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and direct operating expenses during the reporting period. Actual results could differ from those estimates. 5. SELECTED CASH FLOW INFORMATION (in thousands): ---------------------------------------------- Year Ended Six Months December 31 Ended ---------------- June 30, 1995 1994 1996 ------ ------ --------- Capital Expenditures $ 122 $ 44 $ 47 Depreciation 72 86 39 Provision for Bad Debts 114 4 -- 6. TRANSACTIONS WITH AFFILIATES: ----------------------------- The Business sells certain products to other DuPont businesses and divisions. Revenues recorded for these sales approximated $20,000, $47,000, and $580,000 for the years ended December 31, 1995 and 1994, and the six months ended June 30, 1996, respectively. The selling price associated with these revenues approximates the selling price that could have been charged to unaffiliated customers. 9 7. COMMITMENTS AND CONTINGENCIES: ------------------------------ The Business leases certain office space, storage space, vehicles and other equipment under various operating lease agreements. Future minimum rental commitments under noncancelable operating leases are as follows for the years ended December 31 (in thousands): 1996 $ 78 1997 78 1998 68 1999 40 2000 40 Total rental expense included in operations was approximately $79,000, $83,000 and $36,000 for the years ended December 31, 1995 and 1994, and for the six months ended June 30, 1996, respectively. 8. SIGNIFICANT CUSTOMER: --------------------- One customer accounted for approximately 28%, 18% and 24% of net sales for the years ended December 31, 1995 and 1994, and for the six months ended June 30, 1996, respectively. 10 DYNAMIC MATERIALS CORPORATION UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS On July 22, 1996, E.I. duPont de Nemours and Company ("DuPont") entered into an agreement to sell Dynamic Materials Corporation ("DMC" or the "Company") certain assets of their Detaclad Business ("Detaclad") for approximately $5.0 million. The purchase price is subject to an adjustment after closing on a dollar-for-dollar basis to the extent that the actual value of the inventory and accounts receivable at closing are not equal to the estimates used to determine the purchase price. The following Unaudited Pro Forma Condensed Financial Statements of DMC illustrate the effect of the Company's acquisition of certain assets of Detaclad. The Unaudited Pro Forma Condensed Balance Sheet is presented as of June 30, 1996, and illustrates the effects of the acquisition, using the purchase method of accounting, and financing as if they had occurred on that date. The Unaudited Pro Forma Condensed Statements of Operations are presented for the six months ended June 30, 1996, and for the year ended December 31, 1995, and illustrate the effects of the acquisition and the financing as if they had occurred on January 1, 1995. The Unaudited Pro Forma Condensed Financial Statements should be read in conjunction with the historical financial statements of DMC included in DMC's Annual Report on Form 10-K for the year ended December 31, 1995, DMC's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, and the historical financial statements of Detaclad included elsewhere herein. The pro forma adjustments are based on preliminary information about Detaclad's assets acquired and results of operations. Final purchase price allocations will be based on a more complete evaluation and may differ from those shown herein. However, the management of DMC believes that the assumptions utilized provide a reasonable basis for presenting the significant effects of the acquisition and the related incremental financing and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the accompanying pro forma financial information. The Unaudited Pro Forma Condensed Financial Statements may not be indicative of DMC's actual operating results or financial position had the transactions occurred as of the dates indicated above, nor do they purport to indicate operating results or financial position which may be attained in the future. 11 DYNAMIC MATERIALS CORPORATION ----------------------------- UNAUDITED PRO FORMA CONDENSED BALANCE SHEET ------------------------------------------- JUNE 30, 1996 ------------- (Thousands) -----------
Excluded Assets and Liabilities Dynamic and Pro Forma Pro Forma ASSETS Materials Detaclad Adjustments Results - --------------------------------- -------------- ------------ ------------- ----------- CURRENT ASSETS: Cash and cash equivalents $ 2,090 $ 2,090 Accounts receivable, net 3,255 $ 2,143 $ (925) (1) 4,473 Inventories 1,478 2,109 (442) (1) 3,235 90 (3) Prepaid expenses and other 120 120 Deferred tax assets 145 145 --------- --------- --------- --------- Total current assets 7,088 4,252 (1,277) 10,063 Property, plant and equipment, net 2,035 501 474 (2) 3,010 Non-current deferred tax assets 10 10 Other noncurrent assets 46 1,384 (5) 1,640 210 (6) --------- --------- --------- --------- $ 9,179 $ 4,753 $ 791 $ 14,723 ========= ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY -------------------- CURRENT LIABILITIES: Accounts payable $ 1,368 $ 1,368 Accrued expenses 521 $ 300 (4) 1,031 210 (6) Current maturities of long- term debt 91 91 --------- --------- --------- --------- Total current liabilities 1,980 510 2,490 --------- --------- --------- --------- Long-term debt 138 5,034 (6) 5,172 --------- --------- --------- --------- Common stock 126 126 Additional paid in capital 5,927 5,927 Retained earnings 1,008 1,008 Net assets of Detaclad -- 4,753 (4,753) -- --------- --------- --------- --------- 7,061 4,753 (4,753) 7,061 --------- --------- --------- --------- $ 9,179 $ 4,753 $ 791 $ 14,723 ========= ========= ========= =========
See the accompanying Notes to Unaudited Pro Forma Condensed Financial Statements. 12 DYNAMIC MATERIALS CORPORATION ----------------------------- UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS ----------------------------------------------------- FOR THE SIX MONTHS ENDED JUNE 30, 1996 -------------------------------------- (In Thousands, Except Per-Share Amounts) ----------------------------------------
Dynamic Pro Forma Pro Forma Materials Detaclad Adjustments Results ------------- ------------ ------------- ----------- REVENUE $ 11,704 $ 5,925 $ 17,629 COST OF PRODUCTS SOLD 9,400 4,767 $ 46 (8) 14,213 OTHER OPERATING EXPENSES 1,515 671 58 (7) 2,310 --------- --------- --------- --------- 66(10) INCOME FROM OPERATIONS 789 487 (170) 1,106 OTHER INCOME (EXPENSE) 11 -- (191) (9) (180) --------- --------- --------- --------- INCOME BEFORE INCOME TAX PROVISION 800 487 (361) 926 INCOME TAX PROVISION 296 -- 47(11) 343 --------- --------- --------- --------- NET INCOME $ 504 $ 487 $ (408) $ 583 ========= ========= ========= ========= NET INCOME PER SHARE $ 0.20 $ 0.23 ========= ========= WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 2,506,000 2,506,000
See the accompanying Notes to Unaudited Pro Forma Condensed Financial Statements. 13 DYNAMIC MATERIALS CORPORATION ----------------------------- UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS ----------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 1995 ------------------------------------ (In Thousands, Except Per-Share Amounts) ----------------------------------------
Dynamic Pro Forma Pro Forma Materials Detaclad Adjustments Results ------------- ------------ ------------- ----------- REVENUE $ 19,521 $ 11,218 $ 30,739 COST OF PRODUCTS SOLD 15,281 8,619 $99 (8) 23,999 OTHER OPERATING EXPENSES 3,134 1,459 117 (7) 4,842 132(10) --------- --------- --------- --------- INCOME FROM OPERATIONS 1,106 1,140 (348) 1,898 OTHER EXPENSE (44) -- (383) (9) (427) --------- --------- --------- --------- INCOME BEFORE INCOME TAX PROVISION 1,062 1,140 (731) 1,471 INCOME TAX PROVISION 391 -- 151(11) 542 --------- --------- --------- --------- NET INCOME $671 $1,140 $(882) $929 ========= ========= ========= ========= NET INCOME PER SHARE $ 0.27 $ 0.37 ========= ========= WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 2,496,487 2,496,487
See the accompanying Notes to Unaudited Pro Forma Condensed Financial Statements. 14 DYNAMIC MATERIALS CORPORATION ----------------------------- NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS ----------------------------------------------------------- 1. Represents adjustments for certain assets for which DuPont retains ownership. 2. Represents the adjustment to record property, plant and equipment at its estimated fair market value. 3. Represents the adjustment to record inventory at its estimated fair value. 4. Represents the estimated costs associated with investment banking, legal, accounting and other out-of-pocket costs incurred by DMC related to the acquisition of assets of Detaclad. 5. Represents identifiable intangible assets and excess purchase price and transaction costs over the fair value of assets acquired at the date of the acquisition. 6. Represents the issuance of approximately $5.0 million revolving credit facility to acquire the net assets of Detaclad. 7. Represents amortization of intangible assets (trademark, covenant not to compete, and goodwill) on a straight line basis over 3, 5 and 25 years, respectively. 8. Represents the additional depreciation expense arising from the excess of the estimated fair value over the historical basis of fixed assets and to convert to the estimated useful lives assigned by DMC. 9. Represents the interest expense incurred based on current rates related to the revolving debt used to purchase the assets of Detaclad and the amortization of debt issuance costs. 10. Represents the additional DMC overhead costs expected to be incurred associated with operating the Detaclad division. 11. Represents income tax expense on the pro forma adjustments and the historical pretax income related to Detaclad based on an estimated combined effective federal and state income tax rate of approximately 37%. 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DYNAMIC MATERIALS CORPORATION (Registrant) Date: October 4, 1996 By: Paul Lange ------------------------------------- Paul Lange President and Chief Executive Officer 16 -----END PRIVACY-ENHANCED MESSAGE-----